As of 8:00 AM on May 5th, the merger between Flutter Entertainment and The Stars Group was finalized. A few days ago, the owner of the Paddy Power Betfair business revealed the deadline for the acquisition and subsequent merger with The Stars Group, after which the multiple gambling brands owned by the two parties are expected to start integration.
The announcement has come after the shareholders of The Stars Group overwhelmingly backed the company’s decision to sign the agreement worth £10 billion.
The merger ended up creating an extremely powerful entity in the gambling sector, with the new corporation owning a wide range of brands operating in different branches of the industry. Also, upon the completion of the deal, the entire enlarged issued share capital of Flutter Entertainment was admitted to the Official List of the Financial Conduct Authority and Euronext Dublin’s Official List. It has now started trading on the main market for listed securities of the London Stock Exchange, as well as on the Euronext Dublin market.
As a result of the transaction, Flutter Entertainment will own five major segments – Paddy Power Betfair, Sky Betting and Gaming, TSG International excluding the currently existing operations in the US, Australian-based operations including the BetEasy and the SportsBet brands, as well as the US-based operations, including FanDuel.
Gambling Companies’ Merger Gets Regulatory Clearance and Shareholder Approval
The finalization of the two gambling companies’ merger comes after both parties’ shareholders gave their approval to the deal, and the operators received clearance from all remaining regulatory and competition regulatory bodies.
As Casino Guardian already reported, at the end of March, the UK competition gambling authority gave the green light to the mega-merger of the two gambling companies after it completed a probe into the conditions of the proposed agreement.
After the completion of the probe, which was officially announced at the beginning of February 2020, the Competition and Markets Authority (CMA) cleared the £10-billion merger of the two gambling giants, allowing them to create a market behemoth with an extremely strong presence in the sector not only in the UK but also worldwide.
According to the results of the investigation held by the CMA, the strong market presence of the new entity would not end up creating less favourable conditions for the rest of the competitors of the gambling industry. Apart from the newly-formed entity, the major rivals in the sector are set to remain the same – bet365, GVC Holdings, William Hill and Coral. All of them are operational, so the regulatory body ruled that the merger is unlikely to make the situation worse.
The competition watchdog also ruled that the deal would not bring less generous promotions or unfavourable odds to customers.
Enlarged Flutter Entertainment Will Have Five Reporting Segments at First
At the time when the two companies’ shareholders had voted in favour of the merger and the deal and the responsible regulatory bodies have given their permission to the operators to proceed with the deal as planned, Flutter Entertainment and The Stars Group provided some details about the future operations of the merged entity.
The enlarged Flutter Entertainment is to use the federal operating model, with the giant providing its local teams with some independence to respond to the needs and developments of their markets and still retain their access to the larger resources of the broader Group. As mentioned above, the enlarged entity will initially have five reporting segments.
As the gambling operator has also revealed, when it comes to the plans of the gambling giant in the longer term, the newly-formed entity is aimed at establishing an operating and management structure featuring four divisions. At this point, it plans to have its Paddy Power Betfair operations to fuse with TSG International, to form a new UK and Ireland unit that will also include the company’s Sky Betting & Gaming brand, once all necessary technical changes are completed.
According to Peter Jackson, CEO of Flutter Entertainment, who commented on the company’s plans shortly before the completion of the deal, the combined assets of the two companies would allow the already-formed gambling giant to approach its future goals with confidence in the turbulent times they operate in.
Combination of Flutter Entertainment and The Stars Group Comes as Part of Merger and Acquisition Wave in the Sector
The two gambling firms announced their deal in October 2019, with Flutter Entertainment purchasing all shared in TSG International as part of the mega-merger. As a result of the deal, The Stars Group and Flutter joined forces to create one of the biggest companies in the industry. According to preliminary expectations, the newly-formed entity will have annual revenue of about £3.8 billion.
The deal that ended up creating the enlarged group has managed to bring together some exceptional gambling brands, products and well-established businesses that would be the basis on its further efforts in the sector. The diverse global presence on many verticals will offer the gambling giant a chance to establish a remarkable presence worldwide, with both major businesses having a strong legacy of leadership as long as responsible gambling is concerned.
At the time when Flutter Entertainment confirmed that the companies received regulatory clearance of the deal, it also explained that each of the organisational changes would be handled with priority.
The merger of Flutter Entertainment and The Stars Group has come at a time when the gambling sector both in the UK and worldwide is facing some uncertainty. Apart from the turbulence caused by the recent coronavirus lockdown that has affected land-based gambling operations on a global scale, the fact that regulatory bodies on various markets have been aimed at imposing stricter regulation on the industry has also triggered a wave of consolidation in the sector.
Flutter Entertainment itself was created as a result of a merger between Paddy Power and Betfair brands in February 2016. Now, its combination with The Stars Group would provide it with even stronger market presence through a variety of gambling services in all major verticals of the business.